Balanced, booming…bonzer: Australia’s energy industry

Australia possesses an abundance of fossil energy resources, with its coal and oil resources being of particularly good quality. Most of the coal and oil production centres on the south eastern part of the country, proximal to population centres. Approximately 97% of Australian coal is produced in the southeastern states of Queensland and New South Wales. The largest natural gas resources, however, are located in the remote north western area. Developing these remote natural gas resources gave rise to the country’s LNG industry.

Australia is the largest exporter of coal in the world, with year 2010 exports of 298 million tpy, which account for approximately 31% of the world total. With the relative abundance of natural gas and coal, it is understandable that these outputs are growing more quickly than oil.

Growth in Australia’s LNG industry

Australia’s LNG industry is a world leader that is currently in a period of investment and expansion in response to burgeoning demand and strong oil prices. The strength of LNG demand in Asia has continued to engender interest in LNG expansion projects in Australia. The largest LNG expansion plan (and one of the largest natural gas projects in the world) is the Gorgon Project off the north west coast of Australia. Chevron is also planning the Wheatstone LNG project, which will develop the Wheatstone and Iago fields approximately 200 km north of Onslow.

Energy Demand

Although Australia is an OECD country and is considered a mature, industrialised economy, its energy markets are more closely linked to the energy markets of Asia and the Pacific than to the western world. Strong growth in Asia and the ‘Asian Boom’ have influenced the Australian market, both by stimulating economic growth and activity in the region and by expanding export markets for Australian natural resources.

Oil Product demand

Demand growth for oil products has been modest in recent years, with demand of 830 000 bpd in 2004 and 880 000 bpd in 2010. The demand barrel is high in value, with the percentage share of fuel oil and other products falling from 11% in 2004 to just 4% in 2010. Historically, Australia has been a gasoline oriented market.

The Australian refining sector

Australia’s refining industry is mature and capable, but it is characterised by relatively small, older refineries, and there is little incentive to invest in new refineries. The local industry provides for the bulk of the domestic market and plays an important role in regional product trade, but generally it does not compete with the larger, newer, export oriented refineries in Asia. Refinery crude capacity has peaked and been in a period of gentle decline over the past decade.

Conclusion: growth with a plan

Australia is a large country with an ample stock of natural resources and few population pressures. The oil, natural gas and coal industries are well developed, yet they still retain a great deal of potential for additional investment.

Australia seeks to balance economic growth and activity with environmental protection. The country is working to reduce the environmental impacts of coal and oil use, particularly since its small population and dependence on coal in the power sector combine to create a high energy intensity on a per capita basis.

Growth in Australia will be planned growth, but Australia’s energy sector will remain diverse and vibrant.

The full article by Nancy can be found in the January 2012 issue of Hydrocarbon Engineering.